La. Admin. Code tit. 61 § V-111

Current through Register Vol. 50, No. 9, September 20, 2024

Section V-111 - Criteria for Determining Fair Market Value

A. The criteria for determining fair market value shall apply uniformly throughout the state. Uniform guidelines, procedures and rules and regulations as are necessary to implement said criteria shall be adopted by the Louisiana Tax Commission only after public hearings held pursuant to the Administrative Procedure Act (R.S. 47:2323.A).

B. Each assessor shall follow the uniform guidelines, procedures, and rules and regulations within his respective parish or district in determining fair market value of all property subject to taxation. Any manual or manuals used by an assessor shall be subject to approval by the Louisiana Tax Commission or its successor agency (R.S. 47:2323.B).

C. The fair market value of real and personal property shall be determined by the following generally recognized appraisal procedures: the market approach, the cost approach, and the income approach, or a combination of the three. The fair market value of property shall be determined based upon the individual characteristics of the property that affect the market value of the property. The assessor shall consider all three approaches to value and shall utilize all available data that is specific to the valuation of property used to determine the fair market value of property.

1. In utilizing the market approach, the assessor shall use an appraisal technique in which the market value estimate is predicated upon prices paid in actual market transactions. The assessor shall collect relevant comparable sales data, and shall consider such sales data when utilizing a market approach. The assessor shall estimate the value of property based on sales of comparable property in an arm's length transaction under usual and ordinary circumstances. Allocation of the purchase price by the purchaser among properties or assets purchased in a single sale or among elements of a single property may be indicative of fair market value of those properties or assets. Assessors shall reasonably and in good faith consider allocation of the purchase price in such sales.

2. In utilizing the cost approach, the assessor shall use a method in which the value of a property is derived by estimating the replacement or reproduction cost of the property; deducting therefrom the estimated physical, functional, and/or external depreciation, and then adding the market value of the land, if any. In utilizing the cost approach, the assessor shall legitimately consider and appropriately recognize functional and external obsolescence in the derived value. The assessor shall collect market data, including obsolescence, and shall consider such data when utilizing a cost approach.

3. In utilizing the income approach, the assessor shall use an appraisal technique in which the anticipated net income is capitalized to indicate the capital amount of the investment which produces the net income (R.S. 47:2323). The assessor shall collect market data and shall consider such market data when utilizing an income approach.

D. In determining which appraisal procedure to use for the final determination of fair market value, the assessor shall consider:

a. the relevance of each approach to the property being valued.

b. the amount and accuracy of the data used in each approach.

c. the strengths and weaknesses of each approach.

E. When performing a valuation of any affordable rental housing property, the assessor shall not consider any of the following in determining fair market value:

1. income tax credits available to the property under section 42 of the Internal Revenue Code;

2. below-market interest rate on financing obtained under the Home Investment Partnership Program under the Cranston-Gonzales National Affordable Housing Act, or the Federal Home Loan Bank Affordable Housing Program established pursuant to the Financial Institution Reform, Recovery, and Enforcement Act of 1989;

3. any other federal, state, or similar program intended to provide or finance affordable rental housing to persons of low or moderate income and requiring restricted occupancy and rental rates based on the income of the persons occupying such housing.

La. Admin. Code tit. 61, § V-111

Promulgated by the Department of Revenue and Taxation, Tax Commission, LR 8:102 (February 1982), amended LR 10:920 (November 1984), LR 15:1097 (December 1989), LR 16:1063 (December 1990), LR 20:198 (February 1994), Amended by the Office of the Governor, Division of Administration, Tax Commission, LR 43648 (4/1/2017), Amended LR 481517 (6/1/2022).

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:2323.

NOTE: Also see, Chapter 2, §213.G thru G.3. and Chapter 3, §303.C.4 thru C.4.c.